The plan focuses on free cash flow generation through a combination of expected earnings improvements and a disciplined approach to capital investment. Over the next five years, the company plans to reinvest $2.0 – $2.5 billion annually, or approximately 50 percent of its operating cash flow, into improving the company’s fleet, facilities, products and technology. The resulting free cash flow will be used to return cash to shareholders, further reduce the company’s debt, and opportunistically address longer-term pension funding needs, driving up to $5 billion of value to Delta’s shareholders.

As part of this plan, Delta expects to achieve and maintain an adjusted net debt level of $7 billion, a $5 billion reduction over 2012. By meeting the $7 billion target, Delta will have reduced its adjusted net debt by $10 billion since 2009, significantly decreasing the company’s balance sheet risk and generating more than 50 percent savings in interest expense.

As The Wall Street Journal notes, giving money back to shareholders is rare in the airline industry — perhaps another sign that the sector is finally getting its act together.

Delta’s stock is up 81% in the past six months, and has risen 56% in 2013 (and 24% in the past month). Barron’s has been bullish on the airline all year, with Avi Salzman reiterating the call in the March 30 issue.

Shares of United Continental Holdings (UAL) are also up Wednesday morning, gaining more than 1%.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.